State of the Industry Report

Restaurant trends in 2014:

Fast Casual Industry

Prepared by
Bridgette Barnett: Blue Ribbon Diner, Senior Account Executive
Erin Turner: Village Grill, Senior Account Executive

LIVE OAK
communications

Table of Contents
Section I: Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
History of Fast Casual Industry . . . . . . . . . . . . . . . . . . . . . . . . 2

Section II: Detailed Findings . . . . . . . . . . . . . . . . . . . . . . . 3

Menu Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consumer Behavior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Food Trends: The Healthy Eating Revolution . . . . . . . . . . . .

Restaurant Communication . . . . . . . . . . . . . . . . . . . . . . . . . . .

Growth in Fast Casual Segment . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Brand Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Section I: Introduction
This secondary research report will discuss and analyze current trends in the restaurant
industry including new trends in food, technology, and consumer behavior patterns.
Important insights relative to Blue Ribbon Diner and Village Grill are highlighted from
primary research studies.

History of Fast Casual Industry

Fast Casual restaurants emerged in the restaurant scene 10 years ago, and generated
much attention within the industry. Fast casual restaurants were first positioned as
a fresh alternative to traditional fast food, with attention placed on food quality and
service. Over the years, some Fast Casual restaurants have faltered, but many others
have thrived successfully within the market. The industry now accounts for five percent
of the marketplace.
The concept marries the age-old need to eat on the run with a newer consumer
demand for healthier options. Food quality and preparation at traditional fast food
restaurants has come under increased scrutiny in recent years, coinciding with shift in
consumer preference for healthier diets and lifestyles.
Sales at fast casual restaurants are strongest at lunch. Though still lagging behind
traditional fast food franchises in terms of lunch market share, evidence is mounting
that the problem is a lack of availability rather than preference. In a 2010 survey of
consumers who had not eaten at a fast casual restaurant during the preceding month,
nearly 30 percent cited lack of availability as the reason. Consumers are seeking fast,
healthy options, and often cannot find that in our fast food nation.
Source: NPD Group, Restaurant Industry Trends

Section II: Detailed findings

Menu Trends
The following themes have increased in restaurants across the country this year.
Among those themes are healthier menu options, including gluten free and locally
sourced options, smaller portion sizes, and shareable meals.

Top 20 Trends in Food this year

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

Locally sourced meats and seafood

Locally grown produce
Environmental sustainability
Healthful kids meals
Gluten-free cuisine
Hyper-local sourcing (e.g. restaurant gardens)
Childrens nutrition
Non-wheat noodles/pasta (e.g. quinoa, rice, buckwheat)
Sustainable seafood
Farm/estate branded items
Nose-to-tail/root-to-stalk cooking (e.g. reduce food waste by using entire
animal/plant)
12. Whole grain items in kids meals
13. Health/nutrition
14. New cuts of meat (e.g. Denver steak, pork flat iron, tri-tip)
15. Ancient grains (e.g. kamut, spelt, amaranth)
16. Ethnic-inspired breakfast items (e.g. Asian-flavored syrups, Chorizo
scrambled eggs, coconut milk pancakes)
17. Grazing (e.g. small-plate sharing/snacking instead of traditional meals)
18. Non-traditional fish (e.g. branzino, Arctic char, barramundi)
19. Fruit/vegetable childrens side items
20. Half-portions/smaller portions for a smaller price
Source: National Restaurant Associations 2014 Culinary Forecast

Consumers are becoming increasingly concerned with what they eat and drink. Dietary
trends such as gluten-free, vegan, and locally sourced foods are popular among
consumers who buy groceries and/or eat out. Consumers now hold restaurants
more accountable for providing healthier food options; this is reflected in the recently
updated menus of many popular chain restaurants including McDonalds, Popeyes,
Olive Garden, and more. Restaurants are also attempting to cater to a more social

consumer base, allowing them to share food at the table through small plates
and smaller portion sizes. Restaurants are also offering more adventurous menus,
introducing dishes that might be considered non-traditional, such as deconstructed
desserts, ancient grains, ethnic dishes, and more.
It is important to keep up to date on the menu trends, as they are a national reflection
upon consumer dining preferences. These options are only trending because
restaurants across the country are seeing positive responses to them from their diners.
Looking at current menu trends will allow a restaurant to reflect upon its own menu,
perhaps to refresh it and update it to offer new options to diners. Village Grill and Blue
Ribbon Dinner can consider incorporating some of these trends to attract customers
into both restaurants.

CONSUMER BEHAVIOR
DINING OUT AND CARRY OUT
According to a thesis study from The University of Vermont titled, Eating out in
modern American society: why do people make the choice to eat outside the home?
consumers eat out or order takeout for the following reasons:
1.
Entertainment: Customers value the ease of dining out or taking out. It is
essentially an escape from the daily routine of cooking and is therefore an
enjoyable experience. It is a means to display taste, status, and
distinction.
2.
Social connections: Many diners consider dining out a luxury enjoyed
best with friends, family, or coworkers. Restaurants offer a physical space
in which diners can socialize away from their typical environment.
3.
Save time: With the busy schedules of students and work professionals,
dining out or getting takeout is often an easy way to save time and
energy.
4.
Try new foods: Often, diners are limited by their cooking abilities.
Restaurants offer diners a variety of food options that they may not have
access to in their own personal kitchens.
5.
Gain ideas for their own food preparation: Occasionally diners use
restaurant menu items to inspire their own ideas for meals to cook at
home.
Understanding the motivations behind consumer behavior allows a business to predict
patterns in consumer habits and to cater to those habits. As noted in the focus group
analysis for Blue Ribbon Diner, consumers are looking for a place to bring their friends
and family for a social outing. They want a fun, welcoming atmosphere in addition to
excellent food. Blue Ribbon Diner and Village Grill can consider these motivations in
order to attract customers through promotions, events, menu selection, and quality
service.

food trends: the healthy eating revolution

green restaurants
The market for green, health conscious dining is large, as illustrated through a study
in the International Journal of Tourism and Hospitality Research. Close to 90 percent
of participants surveyed have eaten in a green restaurant and more than 50
percent would pay more for the green restaurant experience. Participants said
that they chose green restaurants based on word of mouth and decide to dine at an
establishment based on fresh ingredients, healthy aspects, good value, easy access,
and good for the environment.

gluten free
Already a multi-million dollar industry, the gluten free craze is forcing food producers
and restaurants alike to rethink their food options and menus to meet this consumer
demand.
Consumers are now more aware of what they eat, along with the health effects of their
diet. As a response, companies have churned out a proliferation of new foods and
eating initiatives, turning what once might have been isolated fads into big new product
categories according to the Wall Street Journal.

dining in versus taking out

The takeout and catering businesses are growing quickly in restaurants across the
country. Restaurants are now paying more attention to this by offering the VIP
treatment to their takeout customers. Places like Outback offer curbside pickup and
special parking for takeout customers to ensure a quick experience. Mobile apps
that allow online ordering are becoming increasingly popular among consumers and
restaurants alike. A quarter of consumers who make a habit of takeout say they
order from casual-dining restaurants both during the week and on weekends, with
the balance tipped toward pizza delivery on weeknights and toward carryout from
casual-dining chains and ethnic eateries on weekends. (US Foods) Some food
establishments are also creating mobile food vendors like food trucks to bring their
food right to the streets. Food trucks are very popular in working cities like Washington,
D.C. during lunchtime hours.
Blue Ribbon Diner and Village Grill are extremely popular restaurants in the Burlington
Community. However, there is always room to expand customer reach. Perhaps there
is a whole market of diners in the area that are not connecting with the restaurant
because of dietary restrictions. Perhaps there is a market of farmers that are willing
and able to provide the restaurants with local ingredients. Exploring these options
and researching the possibilities could give Blue Ribbon Diner and Village Grill a
competitive edge in the Burlington restaurant market.

growth in fast casual segment

While the price of commodities rose about 20 percent from 2013 to 2014 (Nations
Restaurant News), the Fast Casual dining industry has only grown larger and more
prosperous. This segment of the restaurant industry has seen customer traffic over the
past five years that has far surpassed that of every other restaurant segment in the
12-month period ending in November 2013, according to new research from The NPD
Group. The research firm found that total customer visits to fast-casual restaurants
increased eight percent from 2012 to 2013, compared with overall traffic for all
restaurant segments. Fast Casual dining is something that consumers are still willing
to spend money on, even though food prices are on the rise. Dining out and carrying
out is still an economically feasible option for many families in the country. Thus, Blue
Ribbon Diner and Village Grill are put at an advantage over fast food chains and fine
dining establishments.
Source: Nations Restaurant News

restaurant communication
current trends
1.
2.
3.
4.

Groupon: a deal-of-the-day website that features discounted gift

certificates usable at local or national companies. Groupon was launched
in November 2008.
Livingsocial: an online marketplace that allows clients to buy and share
things to do in their city. LivingSocial now has more than 70 million
members around the world.
StealZ: a new free mobile app that serves as a photo sharing punch card
where people, including college students, can unlock great deals by
posting pictures to Facebook and other social media outlets.
Facebook: According to the Pew Research Internet Project, 89 percent of
people aged 18-29 and 82 percent of people aged 30-49 use Facebook.
It is the dominant social media platform. With such a large and active
demographic, this is a social media platform that is hard to ignore.
Restaurants like Red Robin and IHOP are utilizing their respective social
media pages to engage users through photo contests and status updates
asking for feedback, to entice users through tantalizing food photography,
to inform users of menu updates and specials, and more. Facebook is not
simply a platform through which a restaurant presents information
to a passive audience. It is a forum in which restaurants and customers
can communicate openly and actively. Blue Ribbon Diner and Village
Grills Facebook pages receive a strong amount of customer activity, but
could benefit from posting more content.

5.

Instagram: Instagram appeals to a younger, and arguably more active

demographic. According to Pew Research Internet Project, 57 percent
of Instagram users visit the site at least once a day. This picture-sharing
mobile app allows restaurants to share food photography, captions and
hashtags to its followers. Users may like and comment on pictures.
Similarly to Facebook, restaurants are posting pictures of their menu
items and specials to inform users in the hopes that they will come to dine
at the establishment. Instagram is valuable to Blue Ribbon Diner and
Village Grill because it presents the opportunity to reach a younger
demographic in the Burlington area.

Incorporating and enhancing the use of a few of these means of communication will
increase brand awareness for Village Grill and Blue Ribbon Diner.

brand management
tips on building a strong brand
1.
2.
3.
4.
5.
6.

7.

8.

Become the Talk of the Town: Localize social media presence to foster a
more authentic consumer interaction.
Get to the Meat of Marketing: Adapt marketing strategies to highlight
sustainable meat.
Define Your Identity: Before pursuing any growth opportunities, operators
should have a clear understanding of who they are as a brand.
Put Your Website to Work: Make your website just as important as your
social media and mobile marketing.
To Discount or Not To Discount: Becoming overly committed to
discounting produces long-term margin headache.
Great brands ignore trends: Instead of following trends, great brands
challenge them and anticipate broader cultural movements that they can
advance and build on. Chipotle founder Steve Ells bucked the low-price,
cheap-food trend of the late 1990s to introduce people to food with
integrity.
Great brands dont chase customers: Hold fast to your brand values and
positioning and accept that your brand isnt for everyone. Brands identify
their best target customers and focus on delivering their unique brand
value to them, even if it means doing things that is less appealing to other
customers. Dunkin Donuts proudly targets everyday folks who keep
America running and doesnt try to impress the coffee elite.
Great brands sweat the small stuff: Overcome organizational silos to
align, unify, and strengthen customer experiences to make a positive
brand impression in even the smallest details. Employees at Chick-fil-A
say my pleasure when responding to customers, turn down the corners
on the restroom toilet paper, and offer to refill drinks.

9.

10.

Great brands commit and stay committed: Be willing to sacrifice shortterm profit to maintain brand integrity and build strong brand equity over
time. Shake Shack CEO Randy Garutti is so committed to preserving the
quality of the brand experience that hes rejected things that threaten to
detract from it, like running a catering operation, launching a food truck,
and adding several menu items.
Great brands never have to give back: In lieu of charitable contributions
and one-time donations, great brands create value for themselves and for
all their stakeholders by pioneering positive social change.

Source: FastCasual.com

All of the above are ways that Village Grill and Blue Ribbon Dinner
can clearly define their brand within the Burlington area.
Both restaurants can incorporate these trends, in an effort to increase
their competitiveness to similar restaurants in both the local and
surrounding areas.